Wednesday, February 21, 2018

Will Rand Paul and Elizabeth Warren Stop a Trump Fed Nominee Who Wants to Insert Magnetic Strips Into US Currency?

Marvin Goodfriend

I have already pointed out that Marvin Goodfriend would be a dangerous addition to the Federal Reserve Board of Governors because of his desire to tax money in checking accounts during recessions via a "negative interest rate."

It turns out that Goodfriend's plan is even more horrific than I originally was aware.

Goodfriend's idea was to insert magnetic strips into the bills. Each time the cash was returned to a bank, the money would be taxed at a pre-determined rate. That would discourage individuals from hoarding cash and remove one obstacle for central bankers in setting negative rates.

There are two senators, from opposite sides of the aisles and political spectrum, who might be able to stop Goodfriend's confirmation.

Here's Reuters again:

Even so, the idea of a tax on cash is politically toxic. Senators Rand Paul and Elizabeth Warren - two lawmakers often on opposite ends of the ideological spectrum - have denounced Goodfriend's idea, and may now put his nomination in jeopardy.

Rand does a lot of good but if Warren can somehow play a role in stopping Goodfriend from getting on the Board, it will probably be the best thing she has ever done in the Senate.

2 comments:

Charging interest on bank deposits may back fire on the likes of Goodfriend. It is a disincentive to use banks. Just the type of thing that could encourage alternatives such as crypto currencies. Bitcoin may not be real money or untraceable but Fed Notes whether actual bills or their digital equivalent are not real money and depositing them in a bank is having them held by the equivalent of a government agency.

A tax on bank deposits might even bring out some creativity from the market for other alternatives.